Business Essay

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6 China Luxury Trends to Watch in the Year of Horse
Frugality is the New Normal, and Brands Are Learning to Deal

China is about to usher in the Year of the Horse, leaving behind the Year of the Snake -- a turning point for many luxury brands, and one they'd rather forget.

Burberry sales are growing in China, despite the luxury cool down.

The government has pushed an anti-corruption campaign for public officials, cracking down on extravagant gift-giving, fancy banquets, high-end hotel stays and even over-the-top funerals. Watch companies and foreign liquor brands have suffered badly.
Mainland China's slowing growth fed into the dynamic, too. Luxury goods, not counting cars and liquor, were estimated to grow only about 2% in China in 2013, compared to 7% in 2012, Bain & Company said.
While the runup to Chinese New Year is traditionally a time of big spending, brands are prepared for more disappointments. Here's a look at some trends worth watching as the Year of the Horse opens on Jan. 31, and how luxury players are adapting.
The cool down: not just a temporary thing
China's wealthy spent 15% less in 2013 than 2012, and 25% less on gift-giving, according to a survey of China's luxury consumers released this month. The reduced extravagance "is here to stay -- this is the new way forward," said Rupert Hoogewerf, who tracks the lives of China's rich as chairman and chief researcher of the Hurun Report.
Mr. Hoogewerf says consumers are shunning displays of wealth, and China is moving closer to Western attitudes about gifts for officials.
Officials are also being cautious of the impact of social media: In September, a provincial official was sentenced to 14 years in prison for corruption after photos of him wearing pricey watches went viral and netizens questioned how he could afford them.
Don't be a tuhao
While officials are being told to tone it down, ordinary consumers are shunning bling as well. The online buzzword of recent months was tuhao –...